We had a very interesting session with the indices closing at the highs for the day going away on a very strong mid-day and afternoon rally. However, the day started out with the indices opening strong and then falling sharply, taking out the rising trendlines of the last few days but not price support. Price support held in the morning. When that occurred the markets then snapped back sharply, and then took off like a bat out of hell and never looked back, moving sharply higher for most of the day, pausing towards the end of the day but firming into the close again.

The Dow was up 94, the S&P up about 10 1/3, and the Nasdaq 100 closed over 1650 for the first time in four years, up 20 3/4. The SOX was up nearly 6 points.

The technicals, which were down in the morning, did come back into positive territory, but were not very impressive, as can normally be expected on a reversal day. Advance-declines were positive by 18 to 14 on New York and about 17 to 12 on Nasdaq. Up/down volume was 5 to 3 positive on a total of about 1.7 billion traded. Nasdaq traded about 1.9 billion with about 11 to 7 positive on up/down volume.

As a result of the non-broad participation, many stocks on TheTechTrader.com board did not participate, but a few did. Pain Therapeutics (PTIE), on some big drug news, was up 2.05 on 6.6 million.

Old favorite Dialysis Corp. of America (DCAI) was up 2.33 on nearly 1 million shares, a big breakout there.

Abgenix (ABGX) on rumors of a bid by Amgen was up 96 cents. Convera (CNVR), one of our former Charts of the Week, was up 91 cents. Forward Industries (FORD) gained 78 cents.

On the downside, losses leaders were in the alternative energy sector, with Energy Conversion Devices (ENER) dropping 91 cents, DayStar Technologies (DSTI), 89 cents, and Evergreen Solar (ESLR) 18 cents.

Other losses of note, Global Industries (GLBL) was down 63 cents, Intevac (IVAC) down 45 and Radvision (RVSN), a recent Chart of the Week, dropped sharply in the morning, came back a little, but closed down 92 cents on the day on the resignation of their CFO.

By far the biggest loss of the day was ViroPharma (VPHM), which moved down very sharply earlier in the day, snapped back a little bit, but still closed down 3.85 on more than 16 million shares, a very big negative reversal there.

Stepping back and reviewing the hourly chart patterns, the indices after severely testing support held and rallied strongly and took out key overhead resistance and rallied to new 2005 highs on the NDX, which closed over 1650. The S&P 500 closed at new rally highs as well, but is still far from its 2005 highs of 1243, closing at 1231.

The breakouts may be the beginning of a fifth and final wave up and the extension of the year-end rally.

Good trading!

Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a FREE 15-day trial to his Real-Time Technical Trading Diary, or sign up for a Free 30-Day Trial to his Top Charts of the Week service.